Forsters’ report, Outside the Box: Supporting an Industrial Evolution, is based on a survey by FTI Consulting’s professional research team in the first quarter of 2023. Sixty-one UK-based professional investors and developers in UK real estate assets were surveyed and another four leading developers and investors were interviewed about their experiences in competing for land, investment and occupiers while adapting to the shifts taking place in uses, formats, locations and policy.
This research reveals a huge range of opportunities across the UK market for those with the scale, expertise or creativity to respond effectively.
77% say that the warehouse bubble has burst
The ‘warehouse bubble’ has burst for 77% of the sector, but almost half (46%) expect an increase in asset values and rental levels in 2023 and a smaller proportion (39%) believe there will be an increase in occupier demand.
The research suggests some mismatch between future investment development. There is a higher demand from investors than developers in transport and logistics (49% investors, 36% developers), retail (28% and 15%) and post and parcel delivery (26% and 18%). Where there is higher demand from developers than investors, the result could be a lack of finance for speculative development.
AI polarises opinion: as likely to have both the most positive and the most negative impact on the sector
Investors and developers were optimistic about the impact of technologies, such as e-commerce (69%), robotics (67%) and electric vehicle charging (67%), and saw the most significant positive impact coming from artificial intelligence (33%) which trumped e-commerce (28%). AI was also seen as most likely to have a negative impact (15%).
Competition for land continues to drive interest in multi-storey industrial development: 52% have seen an increase in developer appetite in the past year and 77% believe that multi-storey sheds will play a large role in UK logistics in the future.
57% identify cost as the greatest barrier to refurbishment of existing buildings
The industry highlighted the need for assistance in meeting net zero targets. Key asks were government subsidies for renewable energy (54%), assistance with measuring progress (34%) and expert guidance (26%).
Around half of respondents also say that running HGVs on clean energy (46%) and creating a modernised site infrastructure (46%) will help co-location and planning permission.
Which location in the UK do you consider offers the best prospects for investment in industrial and logistics real estate in 2023?
Greater London is seen as offering the best prospects for investment by 28%, followed by the North West (13%), South East (11%) and West Midlands (11%). Those who selected Greater London were mainly driven by its connectivity (47%), availability of assets (35%) and availability of supply (35%).
Across all regions, the key factors for investors were connectivity (51%), closely followed by good value (49%) before a large gap to the availability of labour (30%).